Wilkes v. Springside Nursing Home, Inc.: The Backstory
45 Pages Posted: 15 Feb 2011 Last revised: 20 Dec 2011
Date Written: 2011
As it appears in most casebooks, the Wilkes v. Springside Nursing Home, Inc. case tells the story of a falling-out among the shareholders in a closely-held corporation and the resulting freeze-out of one of the owners, Mr. Stanley Wilkes. The opinion indicates that the heart of the dispute arose out of Mr. Wilkes’s refusal to allow the sale of a piece of corporate property (the “Annex” at 793 North Street) to one of the other shareholders, Dr. Quinn, at a discount. In real life, that transaction did indeed cause a significant rift in the shareholders’ relationship, but, as this article discusses, it was really more like the straw that broke the camel’s back than the primary cause of their altercation. The seeds of the dispute were planted well before the Annex was sold to Dr. Quinn.
The unhealthy dynamic that had developed among the shareholders and which eventually resulted in Stanley Wilkes being frozen out of the business had been festering for a long time. The complicated relationship among the shareholders was informed by the somewhat unsavory reputation of Dr. Quinn, the country club “get along” attitude of Messrs, Riche and Connor, and the moral rectitude of Mr. Wilkes. To appreciate how it all came about, the Author sketches out the backgrounds of the players in this drama and describes the plot in more detail.
Keywords: closely held corporations, oppression of shareholders, freeze out
JEL Classification: K20, K22
Suggested Citation: Suggested Citation